Georgia revives Anaklia project with China's help
    A watershed moment for the Caucasus?

    ANALYTICS  24 June 2024 - 14:23

    Fuad Shahbazov

    On May 30, the Georgian authorities announced that a consortium of firms from the People’s Republic of China (PRC) and Singapore would construct the new deep-sea port of Anaklia, located in western Georgia on the Black Sea. However, two of the companies mentioned have controversial reputations: China Communication Construction Company Limited was blacklisted by the US Department of Commerce for building artificial islands in the South China Sea for military purposes, while the World Bank has sanctioned China Road and Bridge Corporation for fraudulent practices in connection with the Philippines' National Road Improvement and Management Program.

    Anaklia Deep Sea Port, Georgia’s largest-ever infrastructure project, was initially proposed by former president Mikhail Saakashvili more than a decade ago as a Georgia-US joint venture. The first phase of the port was set to be fully operational by December 2020. Since then, however, the project has cost $2.5 billion. Previously, a Georgian-American consortium's attempt to build the port was scrapped in 2020. The Georgian government revived the project in 2022, seeking bids and retaining a 51% stake in the port.

    China's vocal interest in boosting its presence in the South Caucasus through infrastructure projects is not a new phenomenon. Its ambitious Belt and Road Initiative (BRI) envisions Beijing's cemented influence in Central Asia, the Caucasus, Southern Europe, Africa, and the Middle East.

    China has already ramped up its presence in Djibouti, on the Horn of Africa, Gwadar in south Pakistan, and Ream in southern Cambodia. What is noteworthy in Georgia is that China is gradually replacing Western powers that were seen as bulwarks against Russian influence. It follows the declaration of a strategic partnership between China and Georgia that was signed last year.

    Georgia's lack of adequate infrastructure has hindered its transit potential, causing congestion at borders and ports. Hence, without a deep-sea port, Georgia and the Middle Corridor won't be competitive as global trade routes.

    Tbilisi awarded China the contract to construct the port in Anaklia, which highlights a decade-long trend of the growing partnership between the PRC and Georgia. While the two countries have maintained a bilateral relationship for over three decades, it was not until 2013 that the relationship began to strengthen. Following the deepening engagement, both states signed a Free Trade Agreement in 2015 to foster and increase bilateral trade volume. As such, China surpassed Georgia's regional partners like Türkiye, Azerbaijan, Russia, and Iran as the leading trade partner.

    Although Georgia’s Western partners cautiously watch Tbilisi’s close partnership with China, there is little chance that Tbilisi and Beijing would downgrade the current partnership level. For example, China’s Ambassador to Georgia marked the recent agreement on Anaklia as a turning point in bilateral relations as both Chinese companies "are the most acclaimed and the strongest construction companies in the world” and refuted the “misinformation” about the company allegedly being under international sanctions.

    On the other hand, Georgia has few options regarding the construction of Anaklia port, as years of searching for investors and foreign companies have yielded no results. Unsurprisingly, Georgia’s pro-Western opposition has been quick to condemn China's selection to complete the project.

    Russia's preoccupation with its war in Ukraine emboldened China to deepen its footprint in Central Asia and the Caucasus by pushing infrastructure projects through. Indeed, Beijing is willing to diversify its trade portfolio by making inroads into new and relatively small markets, while Russia and the West are busy with the ongoing confrontation. Nevertheless, the Western bloc is also keen on further isolationism of Russia, and therefore, alternative trade routes, such as the Middle Corridor, bypassing Russia is a rational choice for everyone. The PRC has invested in transportation and maritime infrastructure all along the Middle Corridor route.

    Anaklia Deep Sea Port would also be an important infrastructure in the entire Middle Corridor, and the whole point of the Middle Corridor is to reduce the interests of Russia.

    Caliber.Az

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